The U.S. regulator for Fannie Mae and Freddie Mac on Wednesday instructed the two taxpayer-owned mortgage finance companies to delay the increase in fees on government-backed loans that the agency announced last month. Mel Watt, the new director of the Federal Housing Finance Agency, said he would postpone the price changes until further study is done on the loan-fee hikes.
"The implications for mortgage credit availability and how these changes might interact with the new ... mortgage standards could be significant," said Watt (pictured at right). "I want to fully understand these implications before deciding whether to move forward with any adjustments."
Fannie Mae and Freddie Mac were scheduled to increase their guarantee fees in 2014. The fees often trickle down to borrowers, and result in higher mortgage rates. In his fist policy decision as FHFA director, Watt, who was sworn in on Monday, is signaling that maintaining borrowers' access to mortgage credit is a high priority. Many consumer and housing industry groups opposed the original fee increase when it was announced by Watt's predecessor, Edward DeMarco.
Fannie Mae and Freddie Mac, which back about 60 percent of U.S. home loans, buy mortgages from lenders and package them into securities on which they guarantee payments of principal and interest. In doing so, they serve as major sources of funding for hundreds of banks. The FHFA said it would provide not less than 120 days' notice after completing the study before making final changes.